WeWork’s Stock Plummets as Reports of Upcoming Bankruptcy Filing Emerge
01 Novembro 2023 - 7:24AM
IH Market News
WeWork (NYSE:WE) experienced a sharp decline in its stock value,
plunging over 35% in premarket trading on Wednesday. This drastic
drop followed reports in the media that the flexible workspace
provider was contemplating filing for bankruptcy as early as the
upcoming week.
The New York-based company, grappling with a substantial debt
burden and consistent losses for several years, was once privately
valued at a staggering $47 billion. However, its market
capitalization has dwindled to a mere $121 million.
This potential bankruptcy filing represents the latest in a
series of setbacks for WeWork, a company backed by SoftBank. Its
initial public offering (IPO) plans fell apart in 2019 amid doubts
about its business model, which involved securing long-term leases
and then subletting the spaces on a short-term basis. WeWork
eventually went public in 2021 at a significantly reduced valuation
compared to its initial expectations, leaving SoftBank with
substantial losses for its investors.
Susannah Streeter, head of money and markets at Hargreaves
Lansdown, remarked, “Even before the pandemic, cracks were
beginning to show in WeWork’s financials, with substantial losses
and high debts. The COVID crisis further exposed the weaknesses in
its business model.”
According to reports, WeWork is contemplating filing a Chapter
11 petition in New Jersey, as initially reported by the Wall Street
Journal on Tuesday.
In a surprising move, the company announced its decision to
withhold the interest payment due on November 1 for its senior
notes due in 2025, despite having the necessary funds to meet the
payment obligation.
As of the last premarket trading session, WeWork’s stock was
valued at $1.45, marking a staggering 96% decline in its value over
the course of this year.
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